♪ ankle: a court hearing set for tuesday on donald trump's travel ban, some saying it is new to protect americans, and scaring away foreign investors. an update on foreign reserves. toyota expects profits to shrink by a quarter this year, even before it navigate trump's border tax, and actually live for a rate hike. this is the second hour of

and it is just" past 8:00 a.m., -- liu.: i am betty yvonne, the philadelphia fed president coming out and saying, wait a minute. the data supports it. next month, we might see a rate hike. we will see how the markets react to that. yes, and john williams, what we saw last week, it really moved markets, because this wage number that we saw is still showing that inflation might be in some areas of the economy. there is still some slack there. ame hard data, we could see rate hike in march and that would be a big thing to watch as we do see some risk off tone, and japan starts to open. this is the latest. and is itht, yvonne,

good enough is essentially what we are looking at. this is slightly better in terms of tone. a consolation when you look at goldbach abovend back above its 100-day moving average. was at least a 10% gain in gold prices. that blew past the 100-day moving averages, and now, we are watching the 200-day. dollar/swissie. and having a look at the equity markets at the moment, we are off the lows of the day when you look at australia and new zealand. said, all that

matters, of course -- there we go. declines at the nikkei open. to the downside. south korea is down 2.5 points, not bad, waiting for it to get warmed up, as well. just about every single industry group, if you will, is on the way down, with the exception, of gold. with the charts, a look at some of the big names we are following today. andook at macquarrie financials over in sydney. and nothing much to know to, in fact, when you look at earnings. roughly in line with their guidance that last year's number. this could be down to the fact this is selling after-the-fact. the stock is still up 40% over the past 12 months or so. resolute mining. and there is a report today. let me just read that to you.

let me just find it for you here. out of the south korean economic -- here we go. here we go. the company has submitted a bid chip stake in the toshiba business, but no number was given. more than 3 trillion yuan. of course, takata down after it fell. not quite enough. comment david, you are watching -- and, david, you are watching a lot of data. yes, certainly, betty. we have one coming out of australia, one out of sri lanka. you mentioned china reserves. that, very quickly, we have exports out of taiwan. that is usually late afternoon in asia.

are what we are expecting there, and we were talking about philippine -- reporting8% inflation for january across asia. this basically comes in and so weed above estimates, are looking at a 2.8% number from the philippines in about one hour's time. betty: thank you, david, in singapore. on theal court judges of those from seven muslim countries and why it should stay. report on it will happen around 3:00 p.m. pacific time, 6:00 reporter:rn time -- it will happen around 3:00 p.m. pacific time, 6:00 p.m. eastern time, and there are judges on the panel, one republican

appointed. it is supposed to be one hour long. this interesting, with three-judge panel, it is liberal leaning, so a lot of people are holdg to keep this ban on as it makes its way potentially there, buteme court what does this actually mean? it means that from those seven muslim-majority areas get to come in, if they get on the plane right now, if they can make it, but when the doj and critics talk about this with the ninth circuit court, the doj is going to say this is a matter of national security, but critics are going to say it is about constitutionality, and with that said, we will look at just tomorrow. it will not be bantered about whether this is constitutional but whether this and will be suspended, yvonne, or not. ramy, some of this has

made it to the u.k., and they may not keep the welcome mat out for trump. ramy: the speaker in the house of commons in the last 24 hours said even though theresa may welcome to mr. trump when they met at the white house in january, now they are saying maybe he is not welcome in the halls of parliament. take a listen. >> before the imposition of the migrant ban, i would, myself, have been strongly opposed by an inress by president trump westminster. after the imposition of the migrant ban by president trump, i am even more strongly opposed. ramy: now, speaker bercow says he does have veto power to keep trump out.

it is not an automatic right. on whetherdebates they can resend prime minister theresa may's invitation, too, yvonne. anchor: all right, ramy inocencio, and now, let's get to the first word news. moving to dismantle the dodd frank act, they say it would be very worrisome. speaking to the european parliament in brussels, mario draghi also hit back over administration claims that germany is taking advantage of an undervalued euro. >> the central bank has not intervened in the market since 2011, as part of a concerted intervention to stabilize the yen following japan's situation after the tsunami.

and one man has been formally ousted from a board, bringing an end to the conglomerate governance battle. calledgest shareholders in people to vote him out. however, he continued to fight his removal in court. there were $18 billion from write-downs involving five andofitable businesses, under the company is down, falling short of analyst estimates, expecting proper to come in at $16.4 billion this year at toyota after reporting a 39% decline in operating profit, which also missed estimates. there is another obstacle the company has to over, involving imports to the u.s. expect the u.s. auto market to be as strong as 2016,

supporting our sales. it is hard to comment on the presidencyhe trump at the moment. we will watch how it evolves and will react accordingly. this is bloomberg. nina, thank you. and deterring some foreign investors, undermining attempts involving overseas fines. let's bring in our china correspondent who is looking at the story for us out of beijing. money in, but you cannot bring money out of china. key thing,hat is the along with a lack of transparency and some key issues we have talked about before, but there are these curves put in ways to try to rein in capital outflows, and fund managers believe they will not be able to get their profits out.

aoomberg spoke to one head of big pension fund in australia who said they would first put money in brazil rather than china. this really speaks to the problems that china faces and policymakers, competing goals, and one is opening up the markets, and they have taken steps to do that, and the other are the curves put in place to an and there up the yu stability of the financial system. we have seen motions and moves to open those up to foreign funds. for example, the hong kong shenzhen stock exchange. and been introduced less popular than some expected. i mean, in 2016, you did see an uptick in chinese equities but from a very low base, around 94 u.s. billion dollars. the market somewhat opened up, and last year, we signed it uptick in foreign holdings of chinese bonds about 12%. again, the low base.

if you compare that to china holdings, for example, of u.s. treasuries, that is what the increase in foreign bond holdings in china is equivalent to. what the treasury owns. and could help the yuan help the chinese government goal by 2020. so far, more steps need to be taken to manage inflows and outflows and encourage foreign managers to invest. anchor: speaking of the outflows, we are going to get an update. what can we expect there? so the survey of economists by bloomberg estimate that the january number is going to come in at around three dollars trillion, compared to december. they have expected the pressure to ease somewhat in light of the

increase in the yuan versus the dollar and the capital controls that have been in place. now, the key psychological levels for many economists is trillion, and if it goes below that, there could be an issue. this will be coming out around 10:00 a.m. beijing time. tom mackenzie there on china. still ahead, feeling the squeeze. apple and samsung losing more ground in china to aggressive, local smartphone manufacturers. : and march is on the table for a rate hike. we will discuss that and more with a cio, next. this is bloomberg. ♪

asia." this is "daybreak

i am yvonne man. liu.: and i am betty a rate hike on the table depending on the economy. a q&a session out west. let's bring in our next guest, at pimco, a firm that manages nearly $1.5 trillion. andrew, always good to see you and have you on the program. so you think this just up to the ame? -- upped the g andrew: it could be in play, but the fed will have to work hard. moment, the markets have very low expectations for march. they do not want to cause a big surprise. the data on friday to big the big income data was not too stro ng. it could be in play.

ofet yellen, the middle february, she does the annual testimony, the house and the senate. if they want to reset expectations for march, that would be a clear point to do it. go three times this year rather than twice, you know, that would be something that mrs. yellen may indicate in that testimony, so that might be quite informing. looking at where the fed funds futures are betting, trading, the rate hike, it is not you get to june, where that probability goes above 50%, and i read through your notes, and you said, look, the really good the some upside risk, that the fed actually goes more than what the markets are pricing in. why do you say that? andrew: well, the markets are pricing in too much. as with many things these days, a lot will depend on the trump

and if the fed goes twice this year, and there is a chance they go a third time, but like everyone else, they are going to try to be figuring out how much they are going to be getting in the way of fiscal expansion over the next year from the trump presidency, and there is a bit of uncertainty there. and if they go in march and get one done early, the market extrapolated price in much more, and if they want to try to go three times this year, it would be going more regularly in the second half of the year, so either way, there is a communications challenge. the wagetion data, inflation data, i should say, from the a role has certainly taken the pressure off of little bit in terms of march, i would have thought. -- i should say, from the has certainly taken the pressure off a little bit. want to go over

to europe, because i know you are quite cautious. in just the last 24 hours with marine le pen danie more and more momentum -- we have a chart -- gaining more and more momentum. we have a chart. brexit and then after trump got elected, and we are seeing populism in europe. is that only going to get worse and wider? andrew: well, in the short-term, it will get worse, but the baseline will get better, is not going to win the french presidency. the problem is all of the noise along the way. she will be one of the two in the runoff for the election, as with the u.s. election last wer, and as with brexit,

have seen populist or populist causes doing well, so the market may being surprised by some of the political events are certainly not going to be surprised in the case of france. you could have shown the spread, italy, some of the other stress measures in the eurozone. something like a 20% type chance is president. there is an 80% chance she is not, which is the upside. the problem with the 20% is that the french president, who is committed to leaving the eu, leaving the eurozone, is a really big deal, in the way that is an issue. this would be a real systemic issue for the eurozone. yvonne: could we see further, given the risks that we do see? figuring out by the euro, and i think growing risks

in europe and the eurozone should be reflected in a weaker euro, but in terms of hedging positions, there are more precise things you can do. france, underweighting peripherals. critiquency, the u.s. is an interesting one. i mean, the euro is weak for a reason. this is not a german currency, so, yes, germany may benefit, but as part of the overall currency issue. andrew, i want to focus on the currency, focusing on the boj, because we saw another emergency operation. about $14.5re, billion in bonds in the last sessions, and that is very interesting, andrew, is that is more than the $1 trillion en -- yen.

are rising yields really driving the boj two act? -- to act? andrew: they do not went to get too far away from the -- do not away ---- well far get too far away.l tot week and today, trying maintain the integrity of their yields, the yield target, not doing too much intervention in the fx side, at another thing that trump -- and another thing that trump brings in, it was not seen as unfair currency intervention. the comments from the trump administration on japan and ofope raises the question

whether monetary policy will get you on the wrong side of the trump white house. rew, thank you, from pimco. coming up, looking at toyota and the protections policies of trump. this is bloomberg. ♪

♪ betty: this is "daybreak: asia." i am betty lou in new york. yvonne: and i am yvonne man in hong kong. ojections,pr including flagging demand and donald trump's nationalism. a question andis not just a factor for some of these companies. toyota did actually

say they expect a nearly $2.3 billion net positive effect on operating profit area -- profit. operating profit at about $16.4 billion. it is $16.2 billion in the year through march. there is quite a difference fall, and they expected to , about one quarter less than the last financial year, so the has helped toyota raise their operating forecast, but the demand, really, we want to see growth fueled by demand, and that really does not look that strong. it is definitely flagging in the u.s.. u.s. auto sales down euro per --r, 2017, and sales flat year by year,n 2017, and sales flat.

tooysts are not disheartened by this. all right come but what about the protectionist trade policy and the impact that might have on toyota? >> this is something that toyota needs to look at, because toyota generated more revenue from the north america market than other japanese companies, about $90 billion of revenue in the year to march. it isof that is because not made in the u.s., and it imports in. nissan and honda, you can see ota, for example, ines a lot of its models japan. this is a big factor for it toyota. may be speaking with prime minister shinzo abe within the week. anchor: a lot to talk about.

all right, ros, rosalind chin. and manipulation and plans to dismantle dodd-frank. we will tell you what he said. ♪

♪ > 8:30 a.m. in singapore, a balmy 79 degrees fahrenheit. half an hour away from the open of trading in the lion city. >> i am betty liu. "bloomberg daybreak: asia" let's get to first word news. hearing francisco court will consider the trump appeal to reinstate its travel ban. "vastlye's decision was overwrought." will goled, the case

back to the seattle court. tesla and spacex the latest companies to join, more than 100 companies now support the brief the importances of immigrants to the economy and society. it comes despite elon musk's position on the business probably advisory council. netanyahu has tried to drum up support for harsher sanctions on iran. on a visit to the u.k., he characterize iran as a menace trump's new mr. sanctions. prime minister theresa may recognizes concerns over iran, but the 2015 nuclear deal remains vital. benjamin netanyahu meets resident trump next week. bill gross is betting interest rates will remain artificially

low for a while. gross says investors should qe's methadone fix. qe has created an unhealthy equilibrium that will have to be dealt with in the long run. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. not a lot of methadone in the markets today. i look at asian markets, david ingles, how is it looking? david: not that good. that being said, we were up for four straight days, so at some point we were going to see this pullback given the demand for haven assets. have a look at precious metals, some more precious, certainly more precious than this time yesterday. the spot price for gold 1234,

silver, platinum, so gains. straight and eighth day of gains, so back above $1000 announced. back to gold, back above the 100 day moving average since october. each time we have seen a 10% gain following that breakout. let's see what happens. be a forward-looking indicator as to where the dollar goes from here. me,ty markets, back on please, on screen, there we go. currencies come up by the way, let's have a look at this first. aussie dollar, we are seeing the

dollar come through a little bit. we have seen declines at about this magnitude, perhaps positioning ahead of the rba. the aussie dollar might get some guidance from the rba, trying to talk down the currency. , across asia,ote three central banks over the next two years seen hiking rates, rba, philippines, thailand. that is the consensus of the moment. equity markets now, japan, australia, new zealand, south korea looking at the kleins. declines. , 19,500 is the june forecast across nine

strategist as to where the nikkei should be. >> thank you. you mentioned the aussie dollar, staying in that tight range. first meeting of 2017 with core inflation below target, superheated housing markets in sydney and melbourne, but the economy shrank in the third quarter. paul allen is watching this force ahead of that decision. you put all that together and it adds up to and, at least 26 of 27 economists surveyed by bloomberg seem to think, the reserve bank of australia will keep things on hold at 1.5% today. the aussientioned,

dollar appreciating come up 5% against the u.s. dollar since the start of the year, up against many of all strays major trading partners as well. one critical thing to watch is inflation. weak consumer prices saw the consumer bank cut twice. has indicated he is willing to tolerate week inflation. the board are not "inflation nutters." as usual, the rba has to walk a tightrope. in sydney, for example, conditions are different than western australia. describe what is going on. seen an emergence of what might be described as a two speed economy in sydney and new south wales, house prices accelerate, housing construction boom going on, household debt increasing to go along with that

thanks to the cheap cost of borrowing. you head out west, queensland, prices stagnating, mining investments have slowed as well. to walk that fine line between booming east and a struggling west, you can see the appeal for the rba to sit tight for a while. yvonne: thank you so much. i will take it from there. mario draghi pushing back against those who would overturn the status quo from donald trump calling for an end to what he sees as currency manipulation, to marine le pen calling for a european departure. kathleen hays is here with more. some feel like mario draghi on the back foot here. >> i think he stepped forward and said you are wrong on some things. he was speaking to european parliament.

he had been asked questions before hand. thatlked about the charge there are currency manipulators like germany, china, and japan, 's yen, germany's membership in the eu, allowing them to accumulate a huge trade surplus, de facto evidence their currencies must be too weak. he said we are not currency manipulators. let's listen. >> the european central bank has not intervened in the foreign currency markets since 2011, and did so then as part of a g-seven intervention to stabilize the yen following japan's earthquake and tsunami in cooperation with u.s. authorities. blame a central

bank for intervening to help support a beleaguered currency like the yen, but let's look at purchasing power parity. ,go., according to this metric, you're looking at g-10 currencies, the euro against the dollar is the most undervalued. it seems to fly in the face of what donald and his team have charged. mario draghi saying germany has a trade surplus because they are more productive. this is a complicated debate. a lot of people say if germany was not in the euro area, they would have a stronger currency and would not have this week currency advantage, but mario draghi making a strong point to support their behavior as a central bank. >> he also made strong points on donald trump's position to roll back dodd-frank. >> he doesn't like it.

dodd-frank is huge. it has many elements. on one point, central bankers agree, you have to keep higher capital requirements in place. what mario draghi was saying, saying the last thing we need is dismantling regulation. guess what? spokeilly fed also out, saying dodd-frank has helped build stability. said the march meeting should have the possibility of a rate hike on the table. every meeting is a live meeting. john williams from the san francisco fed last week said march should have the rate hike on the table. i don't think markets have been looking for that. yellen'sor to janet testimony and a couple of weeks to congress. >> thank you so much.

some breaking news from new central bank governor will not be seeking a second term. saying he willr step down in september. he did mention it was not his intention to serve more than one term. now we are learning that the acting governor, grant spencer, will take his place in september. again, graham wheeler stepping down in september, something i guess he will mention during the meeting this week. all right, more from president trump's foreign-policy next, harvard university and thoughts on president trump's plans and how he compares to george h.w. bush. this is bloomberg. ♪

>> this is "bloomberg daybreak: asia"

i am betty liu in new york. yvonne: i am yvonne man in hong kong. aramco has picked four banks to advise them on its first bond sale ahead of its ipo. react capital will be helping with the sale. it is part of the company's plans to raise as much as $10 billion this year. singapore fine for a share of the ipo, sources say they visited saudi arabia last year to pitch a listing. creating one of the largest investors and hedge funds. 40% stake in a pimco holdings, managing $34 billion. the deal but expects to close in the second quarter and will combined entities at the higher end of the hedge fund league. teva pharmaceuticals chairman

stepping down. ceoill take over as interim as the company looks for a replacement. shares down in extended trading. of the most influential scholars on american foreign-policy says that despite president trump's bluster on twitter, he is not in a position to undermine u.s. judges. he says political discourse was not always discharged, no doubt. period where we had a strong foreign-policy and a civil discourse. technology has heard this somewhat in the sense that in 140 characters, people can be quite rude. of the 2016

campaign was pretty rough. the question is whether politicians will find it to their advantage to keep it that way or whether people will say we would like to hear more politeness, so it is possible that the pendulum will swing back. hand, technology is not in our favor. >> professor, what is your prescription for mr. tillerson? en theould he act giv executive acts and the white house in the first two weeks? on your program, i think the tillerson appointment is a good one. knowsws what he is doing, the world. he will have to deal with a white house which likes to act

quickly, sometimes without carefully worked out consultations, and there is a long tradition of some tension between the state department and the white house national security staff. sixld reagan ran through advisers, so i would expect friction there. the key for tillerson is to keep a steady course on his own. >> what about the friction within the gop? will the parties stay around and actually make sure that donald they is in check, or will rally behind him no matter what happens? >> in the short run, facing in 20 18, a lot of the people who were critical of donald trump in 2016 are reluctant to abandon him. they think they will be better off if they stick with him in their reelection.

on the other hand, if part of what donald trump and steve bannon are doing is trying to organize a new populist party by appealing to the tea party republicans and the so-called reagan democrats, then a lot of the middle-of-the-road republicans, moderate conservative republicans, are going to feel that pressure. next two years will see a good deal of tensions just under the surface. >> professor, what are the chances of a real trade were between the u.s. and china this year? voices willope calm prevail. a trade war would be expensive for china, but it would be expensive for the united states as well, and if you are trying to provide jobs, it is worth remembering that our exports also provide jobs, so i think it is a bad idea, but if you ask me

to place a bet on whether there will be some, i suspect there will be some. just recapping breaking news, the rbnz governor wheeler has announced he will step down after finishing his one-year in september. he said it was always his intention to do one term, so no surprises. thise kiwi hardly moved on , and neither did new zealand shares, partly because this was telegraphed early in the right? a month ago, newspapers were reporting that he was going to make a determination on his future soon, but many expected he would step down at the end of his five years in september. what the rbaling has been as well, trying to pump up inflation.

they have had a difficult time doing this, so this will now go to the next governor, the acting governor grant spencer taking on that role, but we will see how that will shape up. tough to be a central banker these days. yvonne: absolutely. has for his successor, still not clear who will be choosing the neck governor because there will be national elections in september, so about the same time when graham wheeler does finish up his term, so that will be a key question later in the year, but again, graham wheeler stepping down at that time. coming up, upstarts take a bite out of apple sales in china. we will find why it is losing ground in the world's biggest smartphone market. this is bloomberg. ♪

>> this is "bloomberg daybreak: asia" i am yvonne man in hong kong. >> i am betty liu in new york. coming up, what are you watching? rishaad: kicking off things with a look at capital flight out of china. ,x reserves coming through taking a look at how the pboc and the central government are dealing with that. , seeing the data

amount of fx reserves coming down. also tradethat, data, philippine inflation data, and also this mood music changing, and one guest suggests that after two weeks after the inauguration, the honeymoon is over with. also, goldman sachs adjusting euphoria has gone away and there it economist are concerned about what is going on in the u.s. singapore trying to woo the world's biggest ipo coming online in a couple of years, aramco. they are trying to get aramco to list in singapore. we will look at who the other contenders are. that is all coming up in the

next couple of hours. >> see you soon. apple losing its grip on china? had its first annual drop in iphone shipments there. we have seen apple slipping. who is trying to take its place? >> they have always been at the high end. there is a replacement cycle as the iphone 7 did not do as well as well as they hope, shipments down, but you have to look at the tier two into three cities. they are buying cheaper phones. domestic vendors are adding features, some not only a cheaper price, but loaded with features, and keep in mind that in no other place -- well, china is the best example of where apps are loading into two in solutions, like we chat.

you can add an app that does everything for you, so why spend $1000 on apple? oppo's vendors in china, number one with 16.8%, followed , a large conglomerate, and then vivo. that is 48% of the domestic smart phone market. apple shipments down 23.2% in the fourth quarter, 12.8%, so they are losing market share, number four now. the iphone 7 failing to wow. ppo have come up with flexible and curved screens, and also a it can cutthin

through a watermelon. is that something you would want to do? >> i don't know. i have to think about that for a moment. what about xiaomi and samsung? >> xiaomi was the upstart darling on the market. xiaomi in the fourth quarter, shipments down 40.5% in the fourth quarter year over year. shipments downmi 36%, so definitely falling. it shows you how quickly you have to keep up with the competition. themi is number five in market. samsung is not in the top five anymore. they were a couple of years ago number one as they flooded the market globally, but they have had their problems with note 7 and quality and perception issues in the chinese market, so things change quickly. oppo might be number one today, but keep your rearview mirror

on. for sure i can sliced watermelon with my iphone. i know that for sure. >> please don't. unless it is waterproof. >> thank you so much. we are close to the end of "bloomberg daybreak: asia". no slicing of watermelons here. , well intoei 225 session lows. >> it does look like that. policy uncertainty weighing on the markets. much more ahead. ♪

♪ 9:00 a.m. in hong kong, midday in sydney, 8:00 in the evening in new york city. i am rishaad salamat, and this is "bloomberg markets: asia". ♪ rishaad: china's efforts to stem outflows is scaring away foreign investors ahead of an update on its foreign exchange reserves. a court hearing set for tuesday on donald trump's travel ban, the president says it is needed to protect americans. toyota shares